The Goal Book Review By.. Sadashiv Salunkhe XMBA 22 Date: March 2013GE Confidential
Content 1. Executive Summary - The GOAL, Business Novel 2. Author 3. Characters & Story Plot 4. TOC Concept 5. Key Learnings
Executive Summary - The GOAL, Business Novel The Goal is an international bestseller business novel. It was authored by Dr. Eliyahu M. Goldratt and Mr. Jeff Cox and was first published in 1984 “The Goal” demonstrates the effectiveness of Socratic way of approaching and resolving problems, Deductive process gives significant insight into the day-to-day life of an operations manager and challenges common business practices and thought processes. It breaks the myth of true performance measurement & the real Goal of any company, productivity and efficiency of plant operations The book aims at explaining the validity of and logic behind Dr. Goldratt’s Theory of Constraints
Characters & Story PlotCharacters:Mr. Alex Rogo – Plant Manager UNICODr. Jonah – Alex’s ex-teacher and physicistJulie – Alex’s wifeMr. Bill Peach - The division vice president, Alex’s BossAlex’s Staff – BOb (Prd mgr), Ralph (Dat procsessor), Stacey (Inventory controller)Story Plot:The story describes the exciting journey of one Mr. Alex Rogo is the plant manager at oneof the manufacturing units of UniCo in a town called Bearington. UniCo has been runningin losses for the last few years On the other hand, a parallel storyline depicts the maritalproblems faced by Alex with his wife Julie. This highlights the difficulties faced bymanagers, especially those who are obsessed with their work, in their personal lives.The story begins at a point when Mr. Bill Peach, the division vice president, asks Alex tomake his plant profitable within three months. In case of failure, the plant was to be shutdown by the management. Alex has the option to look for another job, but he decides todo whatever he can to save the plant. Here, he recollects a conversation he had with Dr.Jonah, when the latter, through a few simple questions, convinced Alex that the hi-techrobots in his plant are not contributing to the actual goal of the company. He alsoencouraged Alex to figure out the true goal of his organization. Faced with gravedifficulties, Alex figures out that the true goal of the company is to make money.
Author Eliyahu Moshe Goldratt (March 31, 1947 – June 11, 2011) Dr. Goldratt was an Israeli physicist, who later became a business management guru. originator of the Optimized Production Technique, the Theory of Constraints (TOC), the Thinking Processes, Drum-Buffer- Rope, Critical Chain Project Management (CCPM) and other TOC derived tools.The Goal (1984) TOC processfor improving organizations A small stint with Creative Output - Optimized Production Technology (OPT). OPT was billed as the first software toThe Race (1986) furtherdevelops the logistical system provide finite capacity scheduling for productioncalled drum-buffer-rope (DBR) environmentsCritical Chain (1997) applies Avraham Y Goldratt Institute AGI (1985) - self-funded GoldrattTOC to project management Group continued work on TOCNecessary But NotSufficient (2000) applies TOCto Enterprise resourceplanning (ERP)
TOC Concept & TheoryThe theory of constraints is an important tool for operations managers to managebottlenecks and improve process flows.theory states, “the throughput of any system is determined by one constraint (bottleneck).”Thus to increase the throughput, one must focus on identifying and improving thebottleneck or constraint.
Key ConceptTOCLearnings It is important to know what one’s true goal, In the case of UniCo Manufacturing in this book, the goal is to make money. Although it sounds simple and obvious, it is the reason for the companys existence. Everything else is just a means to achieving the goal. The three measurements which express the goal of making money are throughput, inventory and operational expense. Throughput is the rate at which the system generates money through sales. Inventory is all the money that the system has invested in purchasing things it intends to sell. Operational expense is all the money the system spends in order to turn inventory into throughput. Productivity is the act of bringing a company closer to its goal. Productivity is meaningless unless you know what is your goal. A balanced plant is where the capacity of each and every resource is balanced exactly with demand from the market. However, the closer you come to a balanced plant, the closer you are to bankruptcy because the goal is not to improve one measurement in isolation, but all three. Maximum throughput of a system is determined by the constraints in the system.